Oil Prices Slide Over Trump Tariff Concerns and Global Economic Uncertainty

Oil prices dropped sharply Thursday, with Brent crude falling 2.21% to $68.64 per barrel and WTI down 2.65% to $66.57, amid market anxiety over U.S. President Donald Trump’s proposed 50% tariffs on Brazil and other trade partners. The broad tariff threats — including on key suppliers like Japan and South Korea— have sparked fears of slowed global growth and inflation. While Trump's past reversals have made markets more cautious in reacting, investors remain wary due to potential interest rate impacts, as only a few Fed officials currently support imminent cuts. Meanwhile, OPEC+ is expected to approve further output increases for September, but may pause hikes in October if demand peaks. Geopolitical tensions remain high, with U.S.-Russia talks over Ukraine yielding little progress and Trump mulling stricter sanctions.

___________________________________

OPEC+ Considers Output Pause After September Increase

OPEC+ is discussing pausing further production hikes after completing a planned 2.2 million bpd increase by September, including a final monthly increase of 550,000 bpd. Concerns over a growing surplus due to weak Chinese demand and rising U.S. output have driven Brent crude prices down by 0.7% to $69.68 a barrel. Global inventories are rising by about 1 million barrels per day, creating a fourth-quarter surplus equal to 1.5% of global consumption, according to the International Energy Agency. Some OPEC+ members worry that continuing to increase production beyond September could further depress prices, with JPMorgan and Citigroup forecasting crude prices may fall toward $60 a barrel later this year. Despite this, UAE Energy Minister Suhail Al Mazrouei defended the August output hike, noting inventories have not shown a major build-up, indicating the market’s need for additional supply.

___________________________________

EU Eyes Floating Cap on Russian Oil to Boost Sanctions Effectiveness

The European Commission plans to propose a floating price cap on Russian oil this week, adjusting it with global crude prices to strengthen sanctions and overcome internal EU resistance. The previous G7-imposed $60 per barrel cap, set in December 2022, has become ineffective amid declining global prices, prompting a push for a revised mechanism starting just above $45 per barrel. Opposition remains from maritime nations like Greece, Cyprus, and Malta, concerned about economic impacts on their shipping sectors, and from Slovakia due to broader energy policy disagreements. The new proposal, still under revision, would include an automated review system and may gain support from U.S. senators despite prior U.S. reluctance. Unanimous approval among EU members is required for adoption of the broader 18th sanctions package.

___________________________________

UAE Signals Potential Oil Capacity Boost to 6 Million bpd After 2027 if Needed

The UAE is open to raising its oil production capacity to 6 million bpd after 2027 if market demand justifies it, Energy Minister Suhail al-Mazrouei said Thursday. While the official target remains at 5 million bpd by 2027, such an increase would position the UAE among the world’s top four oil producers, alongside the U.S., Saudi Arabia, and Russia. The move comes amid ongoing debates within OPEC+ about production quotas, which are tied to capacity. The group is currently increasing output and will retain 3.65 million bpd of cuts through 2026. OPEC+ recently assigned specialists to reassess member capacity to guide 2027 quotas.

___________________________________

Brazil Poised to Redirect Oil Exports as Trump Tariff Looms

Brazil is preparing to redirect oil exports if a proposed 50% U.S. tariff takes effect on August 1, which could affect 243,000 bpd currently shipped to the U.S. The Brazilian Petroleum Institute expressed concern and urged diplomatic action, as oil is Brazil’s top export to the U.S., previously exempt from the 10% tariff. Analysts from BTG Pactual believe the tariffs pose no long-term structural risk and that Petrobras, whose U.S. exports represent only 4% of its total, can easily find alternative markets. Brazil’s total oil exports stood at 1.78 million bpd in 2024, with 77,000 bpd of refined products going to the U.S. Petrobras stated it is evaluating the tariff’s impact but remains committed to optimizing export strategies.

___________________________________

Exxon Halts Mars Crude Purchases Over Zinc Contamination Concern

ExxonMobil has informed its trading partners it will suspend purchases of Mars crude oil until a zinc contamination issue is resolved, sources told Reuters. The zinc contamination has led to reduced demand and lower prices for Mars crude, produced off the U.S. Gulf Coast. Mars crude traded at a slight 10-cent premium to Cushing crude on Thursday, recovering from a 10-cent discount earlier in the week, but down from a $1 premium at June’s end. Zinc contamination is unusual in crude oil and poses risks of damage to refinery equipment and catalysts. Exxon declined to comment on the situation.

___________________________________

July Diesel Asia-Europe Price Spread Widens to 2.5-Year High Amid Arbitrage Opportunities

The July diesel price spread between Asia and Europe widened to nearly $120 per metric ton, marking its largest gap in over 2.5 years, according to LSEG data. This spread, measured by the exchange of futures for swaps (EFS) between ICE gasoil futures and Singapore swaps, last reached this level in October 2022. The surge in European diesel prices is encouraging suppliers from India and the Middle East to redirect cargoes westward to Europe to benefit from higher prices. However, the market faces risks from backwardation, where prompt prices exceed future prices, which could lower cargo values upon arrival later in July or August. The July/August ICE gasoil spread hit $110 per ton, the widest since the EU embargo on Russian oil in late 2022, with August/September spreads also showing backwardation.

___________________________________

Clarksons: Tanker Rates Poised for Breakout as Oil Demand Stays Strong

Clarksons Securities predicts tanker rates may surge after the summer lull due to rising oil flows and strong global demand. Although VLCC earnings have dipped seasonally—currently at $35,600/day—they remain up 13% over the past month. Analysts highlight that new OPEC+ and Atlantic basin supply could drive rates higher by Q4. Despite easing Middle East tensions, Brent crude climbed above $70, reflecting tight inventories and resilient demand. European refinery margins hit a yearly high, pointing to stronger crude runs ahead. Singapore's Sentosa Ship Brokers also sees signs of increased OPEC+ exports, potentially supporting VLCC markets during typically weak summer months.

___________________________________

Deutsche Bank: Tanker Boom May Stall in 2026 Despite Strong 2025 Earnings

Deutsche Bank remains bullish on crude and product tanker earnings for the rest of 2025 but warns of a possible downturn starting in 2026. Analyst Chris Robertson raised full-year earnings forecasts for International Seaways and Scorpio Tankers, citing better-than-expected results, but trimmed 12-month price targets due to concerns about fleet growth outpacing tonne-mile demand next year. Ongoing geopolitical disruptions—such as Red Sea rerouting and the Ukraine conflict—continue to support rates, but normalization could reverse this. Deutsche Bank also cut Q2 earnings projections for both firms, anticipating softer rates, and expects Seaways to maintain a $0.59 dividend. Share repurchases and debt reduction remain Scorpio’s focus amid undervalued stock levels.

___________________________________

Lila Global Re-Enters Tanker Market with VLCC and MR2 Acquisitions

Lila Global, led by Anil Sharma, has returned to the tanker market after over two years, acquiring a 2008-built VLCC and two 2007-built MR2 product tankers. The Dubai-based firm bought the Seaways Frontier and Seaways Citron (renamed Lila Miami and Lila Kingston) from International Seaways for $28 million and the former MOL M Star (now Lila Kochi) for $48 million. Lila had previously exited the tanker market during the post-Ukraine invasion price surge, shifting to bulkers. Now, it aims for diversified holdings, seeking value opportunities in well-maintained older tankers for upgrades. The VLCC is en route to Singapore for deployment, while the MR2s have joined the Norden pool. Lila outsources management for its smaller tanker fleet but remains open to expansion if market conditions align.

___________________________________

Southeast Asia Sees 83% Surge in Ship Piracy and Armed Robberies in First Half of 2025

Piracy and armed robberies against ships in Southeast Asia surged 83% in the first half of 2025, with 95 incidents reported, mostly in the Straits of Malacca and Singapore. Most attacks occurred after dark on slow-moving vessels, targeting mainly bulk carriers and tankers. Despite the rise, 90% of incidents involved no crew injuries, and in half the cases nothing was stolen. The perpetrators often risk their lives for low-value items, suggesting socioeconomic factors behind the crimes. ReCAAP called for increased regional security and urged shipmasters to improve watchkeeping and preventive measures during high-risk hours.

___________________________________

Indian Oil Upgrades Panipat Refinery for Sustainable Aviation Fuel and Green Hydrogen

Indian Oil plans to upgrade the diesel desulphuriser unit at its 300,000 bpd Panipat refinery by late 2025 or early 2026 to produce 30,000 metric tons per year of sustainable aviation fuel (SAF) using used cooking oil. India targets 1% SAF blending in aviation fuel by 2027, rising to 2% by 2028. The refinery’s diesel output will not be affected due to additional hydrotreaters on site. Indian Oil will also seek bids for a 70,000 tons-per-year green hydrogen plant and has already awarded a contract for a 10,000 tons-per-year green hydrogen facility at Panipat, with a price of ₹397 ($4.64) per kilogram. The company aims for refiners to meet 50% of their hydrogen needs through green hydrogen by 2030.